Ascendant Resources Inc. (TSX: ASND) (OTCQX:
ASDRF; FRA: 2D9) ("Ascendant" or the "Company”) reports third
quarter 2019 results highlighted by record head grades of 7.8% zinc
equivalent (“ZnEq”) and contained metal production of 28.8 million
ZnEq pounds and the lowest All-In Sustaining Costs (“AISC”) and
cash costs since assuming ownership of the El Mochito mine in
Honduras.
Mr. Chris Buncic, President & CEO of
Ascendant stated, “We are very pleased with the mine’s performance
in Q3/19 demonstrating considerable production growth over the
previous strong quarter. The decision we made in the first half of
the year to increase investment in underground development work in
order to access high-grade areas within the mine has proven very
beneficial for us as we report record head-grades and contained
metal production this quarter. As a result, we reported a
substantial decrease in all-in sustaining costs to $1.09 per
payable pound sold at the mine site and $1.13 on a consolidated
basis. Direct operating costs were slightly higher than those in
Q2/19 as the reduction in underground development work this quarter
translates to less waste tonnes being capitalized.”
1 ZnEq lbs and grades in % represents zinc metal
considered together with the lead and silver expressed in zinc
equivalent terms of zinc using spot metal prices and production
during the period.
He continued, “We are well advanced on several
avenues of funding for both the expansion project at El Mochito, as
well as for general liquidity purposes, to see us through to the
completion of the expansion project.”
“In addition, the updated Mineral Resource
Estimate successfully upgraded the resources at the Lagoa Salgada
project in Portugal and provides an economic case for the North
Zone, which we hope to demonstrate through a Preliminary Economic
Assessment expected to be completed by the end of the year. The
North Zone continues to remain open in all directions and the
limited drilling undertaken in the Central and South Zones indicate
highly prospective targets which will be the focus of future
drilling.”
A summary of key operational and
financial performance for the third quarter 2019 is provided in the
tables below:
|
|
|
|
Three months ended |
Nine months ended |
Key Operating Information |
|
|
September 30, |
September 30, |
September 30, |
September 30, |
|
|
|
|
2019 |
2018 |
2019 |
2018 |
Total Tonnes Mined |
|
tonnes |
205,004 |
193,590 |
603,110 |
570,534 |
|
|
|
|
|
- |
|
- |
Total Tonnes Milled |
|
tonnes |
199,944 |
191,738 |
588,572 |
571,121 |
|
|
|
|
|
- |
|
- |
Average Head Grades |
|
|
|
|
|
|
|
Average Zn grade |
|
% |
4.4% |
4.5% |
4.4% |
4.3% |
|
Average Pb grade |
|
% |
2.1% |
1.7% |
1.9% |
1.6% |
|
Average Silver grade |
|
g/t |
69 |
45 |
66 |
46 |
|
ZnEq Head grade |
(1) |
% |
7.8% |
6.7% |
7.1% |
6.4% |
|
|
|
|
|
- |
|
- |
Average Recoveries |
|
|
|
|
|
|
|
Zinc |
|
% |
84.3% |
87.8% |
85.0% |
89.2% |
|
Lead |
|
% |
80.6% |
78.9% |
80.6% |
77.9% |
|
Silver |
|
% |
82.7% |
77.8% |
81.2% |
78.6% |
|
|
|
|
|
- |
|
- |
Contained Metal Production |
|
|
|
|
|
- |
|
Zinc |
|
000's lbs |
16,369 |
16,579 |
47,976 |
48,223 |
|
Lead |
|
000's lbs |
7,533 |
5,552 |
19,403 |
15,787 |
|
Silver |
|
ozs |
366,168 |
209,622 |
1,007,239 |
654,264 |
|
ZnEq |
(1) |
000's lbs |
28,834 |
23,919 |
76,842 |
68,257 |
|
|
|
|
|
- |
|
- |
Payable Production |
|
|
|
|
|
- |
|
Zinc |
|
000's lbs |
13,914 |
14,092 |
40,779 |
40,990 |
|
Lead |
|
000's lbs |
7,156 |
5,274 |
18,433 |
14,997 |
|
Silver |
|
ozs |
256,317 |
146,735 |
705,067 |
457,984 |
|
ZnEq |
(1) |
000's lbs |
24,509 |
20,331 |
65,316 |
58,018 |
|
|
|
|
|
- |
|
- |
Payable Metal Sold |
|
|
|
|
|
|
|
Zinc |
|
000's lbs |
16,071 |
11,451 |
39,875 |
40,791 |
|
Lead |
|
000's lbs |
7,359 |
5,581 |
17,531 |
17,235 |
|
Silver |
|
ozs |
345,483 |
189,010 |
862,717 |
539,547 |
|
ZnEq |
(1) |
000's lbs |
27,975 |
18,563 |
65,361 |
60,360 |
|
|
|
|
|
- |
|
- |
Average Realized Metal Price |
|
|
|
|
|
|
|
Zinc |
|
$/lb |
$1.09 |
$1.13 |
$1.18 |
$1.36 |
|
Lead |
|
$/lb |
$0.92 |
$0.92 |
$0.90 |
$1.03 |
|
Silver |
|
$/oz |
$16.57 |
$14.46 |
$15.74 |
$15.72 |
|
|
|
|
|
- |
|
- |
Cash operating cost per ZnEq payable lb sold |
(2) |
$/ZnEq lb |
$0.70 |
$0.72 |
$0.74 |
$0.77 |
AISC per ZnEq payable lb sold - El Mochito |
(2) |
$/ZnEq lb |
$1.09 |
$1.14 |
$1.19 |
$1.24 |
AISC per ZnEq payable lb sold - Consolidated |
(2) |
$/ZnEq lb |
$1.13 |
$1.21 |
$1.27 |
$1.32 |
Direct operating cost per tonne milled (excl.
CAPEX) |
(2) |
$/tonne |
$86.52 |
$81.66 |
$82.99 |
$76.91 |
(1) |
Assumes average
spot metal prices for the period. |
|
|
|
|
|
|
(2) |
This is a non-IFRS performance measure, see Non-IFRS Performance
Measures section of the MD&A. |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
Nine months ended |
Financial |
|
|
September 30, |
September 30, |
September 30, |
September 30, |
|
|
|
|
2019 |
2018 |
2019 |
2018 |
|
Total
revenue |
|
$000's |
22,032 |
13,359 |
57,849 |
64,054 |
|
Mine operating
expenses |
|
$000's |
22,333 |
14,984 |
56,039 |
52,153 |
|
Income (loss)
from mining operations |
|
$000's |
(301) |
(1,625) |
1,810 |
11,901 |
|
Net income
(loss) |
|
$000's |
(5,214) |
(3,853) |
(11,801) |
6,023 |
|
Adjusted
EBITDA |
(2) |
$000's |
357 |
(1,725) |
2,314 |
13,593 |
|
Operating cash
flow before movements in working capital |
(2) |
$000's |
(1,257) |
(1,585) |
6,126 |
10,987 |
|
Operating cash
flow |
|
$000's |
4,686 |
(1,365) |
7,430 |
16,547 |
|
Cash and cash
equivalents |
|
$000's |
3,946 |
7,415 |
3,946 |
7,415 |
|
Working
capital surplus (deficiency) |
|
$000's |
(17,352) |
757 |
(17,352) |
757 |
|
Capital Expenditures |
|
$000's |
3,249 |
4,205 |
12,185 |
18,323 |
(1) |
Assumes average
spot metal prices for the period. |
|
|
|
|
|
|
(2) |
This is a non-IFRS performance measure, see Non-IFRS Performance
Measures section of the MD&A. |
Third Quarter 2019 Operational
Performance
During Q3/19 contained ZnEq metal production was
28.8 million pounds, a 21% increase over third quarter 2018
(“Q3/18”) production of 23.9 million pounds, and a 17% increase
over the prior strong second quarter 2019 (“Q2/19”) of 24.6 million
pounds as a result of significantly higher lead and silver grades
from the higher-grade Esperanza and Port Royal chimneys as well as
the production from the upper, historical part of the mine.
Milled throughput for Q3/19 was 199,944 tonnes,
demonstrating a 4.3% improvement over 191,738 tonnes in Q3/18 and a
2.2% improvement over 195,706 tonnes in Q2/19.
The average head grade of 7.8% ZnEq for the
quarter represents an increase of 17% over the 6.7% ZnEq achieved
in both Q3/18 and Q2/19. Milled zinc grades for the quarter were
4.4% zinc, slightly down (2%) from Q3/18 and flat against the
improvement in grade in Q2/19. Lead head grades of 2.1% lead showed
a significant 28% improvement over Q3/18 and a 26% improvement over
the previous quarter. Silver feed grades also increased
significantly by 53% to 69g/t from the 45g/t achieved in Q3/18 and
increased 2% from 67g/t achieved in Q2/19. The increase in silver
and lead grades are a direct result of the Company focusing on
extraction of various, small high-grade pillars in the upper
historic part of the mine which is expected to continue for the
rest of the year and into 2020.
Zinc processing recoveries of 84.3% in Q3/19
were 4% lower compared to 87.8% in Q3/18 and 2% lower than the
86.4% in Q2/19 due to the increased volumes of complicated zinc
ores mined from the Esperanza orebody. Lead recoveries of 80.6% was
up approximately 2% against Q3/18 and down 1% from Q2/19. Silver
recoveries were 82.7%, an increase of 6% from Q3/18 and 1% from
Q2/19.
Third Quarter 2019 Financial
Performance
In Q3/19, the Company generated revenues of
$22.03 million as a result of the sale of 28.0 million pounds of
ZnEq metal, comprised of 16.1 million pounds of payable zinc in
concentrates, 7.4 million pounds of payable lead in concentrates
and 345,483 ounces of payable silver in concentrates. Average
realized provisional metal prices were $1.09 per pound zinc, $0.92
per pound lead and $16.57 per ounce silver. Revenues in Q3/19 were
up 65% over Q3/18 as a result of substantially higher levels of
payable metal sold, especially silver, as well as a 15% higher
average silver price. Revenues also demonstrated a 22% increase
over Q2/19 also due to greater payable metal sold and improved
silver and lead prices.
Net loss and basic and diluted loss per share in
Q3/19 were $5.21 million and $0.07 respectively, compared to a loss
and basic and diluted loss per share of $3.85 million and $0.05 in
Q3/18, and a net loss and basic and diluted loss per share in Q2/19
of $4.18 million and $0.05. Losses from mining operations in Q3/19
was $0.30 million.
Adjusted EBITDA for Q3/19 was $0.36 million,
compared to Adjusted EBITDA of ($1.73) million in Q3/18 and $0.51
million in Q2/19.
The Company has been successful at offsetting
operating cost pressures through significant grade improvements,
specifically from higher-grade production from conventional mining
areas and the historical upper areas of the mine, driving increased
contained metal production and thus lowering unit costs. As such,
cash operating cost per ZnEq payable pound sold for Q3/19 was
$0.70, the lowest since Ascendant assumed operations of El Mochito,
representing a 3% decrease from Q3/18 and an 8% decrease over
Q2/19. Despite energy and labour cost pressures, the Company has
maintained or reduced cash operating cost per ZnEq payable pound
sold throughout 2018 and 2019, due to the focus on improving metal
production.
Direct operating costs per tonne milled for
Q3/19 at El Mochito were $86.52, a 6% increase versus Q3/18 direct
operating costs per tonne milled of $81.66 and Q2/19 direct
operating costs per tonne milled of $81.79. The increase over Q3/18
is primarily a result of the previously disclosed 15% increase in
national power rates imposed in September 2018 as well as the 6%
increase in labour costs that took place in October 2018. Also
contributing to this was the increased proportion of
labour-intensive conventional mining required to mine the
higher-grade chimney ore, which in turn has reflected its benefits
in the improved grade profile of the mine, reducing operating costs
on a per payable pound basis. The increase in direct operating
costs on a per tonne milled basis over the previous quarter is
primarily a function of the significant decrease in sustaining
capital expenditure on underground development in Q3/19 resulting
in a higher portion of fixed costs being allocated to operating
costs as such costs are not capitalized and instead flow through to
expenses and direct operating costs.
The AISC on a mine site basis at El Mochito in
Q3/19 was $1.09 per ZnEq payable pound sold, representing a 4%
decrease from Q3/18 of $1.14 and a 17% decrease over Q2/19 of
$1.32. The AISC on a consolidated basis for Q3/19 was $1.13 per
ZnEq payable pound sold, representing a 7% decrease from $1.21 in
Q3/18 and a 21% decrease over $1.43 in the previous quarter. The
substantial decrease in mine site AISC compared to the previous
quarter is a direct result of the increase in payable pounds sold
given the strong operating quarter. On a consolidated basis, the
reduction in AISC as compared with Q2/19 is a result of higher
payable pounds sold, a decrease in capital expenditures and the
absence of the one-time financing costs incurred in Q2/19.
With respect to liquidity, the Company remains
in late stage negotiations regarding the funding of its expansion
program for the El Mochito mine and still expects to have
definitive news by the end of the year. Further, the Company
continues to work with its financial partners to ensure financial
liquidity between now and the end of construction for the El
Mochito optimization and expansion.
Lagoa Salgada Project
In Q3/19, the Company completed its modest and
targeted 2019 exploration program at the Lagoa Salgada project that
included a diamond drill program consisting of 24 holes totaling
8,164 metres, a grounded Induced Polarization (“IP”) survey
covering the 8km gravity anomaly identified in the 2018 program and
selected borehole IP.
The drill program primarily focused on infill
drilling in the North Zone to increase the confidence in the grade
and tonnage, while four holes were allocated to test the strong IP
chargeability anomaly in the Central and South Zones.
Drill hole highlights from results released in
the quarter include (true thickness):
Gossan • LS_MS_26- 9.1m at 0.16% Cu, 9.79%
Pb, 1.13% Zn, 2.54g/t Au, 37.64g/t Ag and 0.39% Sn (16.52%
ZnEq)• LS_MS_30-13.4m at 0.06% Cu, 5.99%
Pb, 0.33% Zn, 3.95g/t Au, 16.56g/t Ag and 0.61% Sn (13.19%
ZnEq)
Massive Sulphide • LS_MS_33- 24.9m at 0.42% Cu,
6.56% Pb, 5.76% Zn, 1.17g/t Au, 184.84g/t Ag and 0.23% Sn
(21.09% ZnEq)•
LS_MS_36- 20.3m at 0.23% Cu, 6.14% Pb, 9.76% Zn,
1.42g/t Au, 104.65g/t Ag and 0.19% Sn (22.61%
ZnEq)• LS_MS_35- 37.6m at 0.25% Cu,
4.10% Pb, 6.87% Zn, 1.19g/t Au, 99.42g/t Ag and 0.17% Sn
(17.21% ZnEq)•
LS_MS_22- 60.1m at 0.46% Cu, 2.91% Pb, 3.70% Zn,
0.77g/t Au, 81.04g/t Ag and 0.11% Sn (11.62%
ZnEq)• LS_MS_25- 19.6m at 0.21% Cu,
5.23% Pb, 5.76% Zn, 1.29g/t Au, 137.32g/t Ag and 0.23% Sn
(18.32% ZnEq)•
LS_MS_39- 36.2m at 0.39% Cu, 6.26% Pb, 7.30% Zn,
1.37g/t Au, 165.63g/t Ag and 0.20% Sn (21.90%
ZnEq)• LS_MS_38- 35.2m at 0.19% Cu,
2.28% Pb, 4.01% Zn, 0.70g/t Au, 47.98g/t Ag and 0.13% Sn
(9.84% ZnEq)
Stockwork• LS_ST_16- 130.6m at 0.32% Cu,
0.82% Pb, 1.50% Zn, 0.04g/t Au, 12.89g/t Ag and 0.01% Sn
(1.33% CuEq)
Including 26.7m at 0.58% Cu, 1.13% Pb, 2.66%
Zn, 0.03g/t Au, 24.78g/t Ag and 0.01% Sn (2.24%
CuEq)
Results from the 2019 drill program contributed
to the successful updated Mineral Resource Estimate for the Lagoa
Salgada project, the Company announced on September 25, 2019,
significantly upgrading the resources at Lagoa Salgada. The update
Mineral Resource Estimate was prepared in accordance with Canadian
National Instrument 43-101 (“NI 43-101”) with an effective date of
September 5, 2019.
Results of the Mineral Resource Estimate update
demonstrated material growth in the North Zone (the main massive
sulphide) with the conversion of significant resources into the
Measured & Indicated (“M&I”) category. To date the North
Zone has been delineated by less than a total of 76 holes.
Highlights are as follows:
- North Zone: Measured Mineral Resources increased by 57% to 2.8
Mt at 10.7% ZnEq1.
- North Zone: Measured & Indicated Mineral Resources
increased by 71% to 10.3 Mt at 9.1% ZnEq:
- 170% increase in the precious metal rich gossan zone to 1.7 Mt
at 4.6g/t AuEq2.
- Global NI 43-101 Measured and Indicated Resources of 12.8
million tonnes and Inferred Resources of 10.3 million tonnes.
- Drilling in the Central and South Zones identified Copper rich
sulphide mineralization. The new resources in these zones are
reported in Copper equivalent grades. Future drill programs will
focus on expanding and upgrading these zones.
1 ZnEq% = ((Zn Grade*25.35)+(Pb Grade*23.15)+(Cu
Grade*67.24)+(Au Grade*40.19)+(Ag Grade*0.62)+(Sn
Grade*191.75))/25.352 AuEq(g/t) = ((Zn Grade*25.35)+(Pb
Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag Grade*0.62)
)+(Sn Grade*191.75))/40.19
A summary of the Mineral Resource Estimate is set out in the
table below:
Lagoa Salgada Mineral Resource Estimate -
Effective September 5, 2019
North Zone Mineral Resource Estimate
|
|
|
|
|
Average Grade |
Contained Metal |
Deposit |
Category |
Min |
Cut-off |
Tonnes |
Cu |
Zn |
Pb |
Sn |
Ag |
Au |
ZnEq |
AuEq |
Cu |
Zn |
Pb |
Sn |
Ag |
Au |
|
|
Zones |
ZnEq% |
(kt) |
(%) |
(%) |
(%) |
(%) |
(g/t) |
(g/t) |
(%) |
(g/t) |
(kt) |
(kt) |
(kt) |
(kt) |
(koz) |
(koz) |
North |
Measured(M) |
GO |
2.5 |
234 |
0.13 |
0.70 |
4.32 |
0.36 |
51 |
1.50 |
11.38 |
7.18 |
0.3 |
1.6 |
10.1 |
0.9 |
385.2 |
11.3 |
|
Indicated(I) |
GO |
2.5 |
1,462 |
0.08 |
0.43 |
2.55 |
0.26 |
37 |
0.51 |
6.63 |
4.18 |
1.2 |
6.2 |
37.3 |
3.8 |
1,742.1 |
23.8 |
|
M &
I |
GO |
2.5 |
1,696 |
0.09 |
0.47 |
2.79 |
0.27 |
39 |
0.64 |
7.28 |
4.60 |
1.5 |
7.9 |
47.4 |
4.6 |
2,127.2 |
35.1 |
|
Inferred |
GO |
2.5 |
831 |
0.08 |
0.48 |
2.62 |
0.17 |
27 |
0.37 |
5.66 |
3.57 |
0.7 |
4.0 |
21.8 |
1.4 |
727.6 |
9.9 |
|
Measured(M) |
MS |
3.0 |
2,444 |
0.40 |
3.12 |
2.97 |
0.15 |
72 |
0.74 |
10.95 |
6.91 |
9.7 |
76.3 |
72.5 |
3.7 |
5,623.9 |
58.4 |
|
Indicated(I) |
MS |
3.0 |
5,457 |
0.45 |
2.35 |
2.30 |
0.13 |
75 |
0.67 |
9.55 |
6.03 |
24.5 |
128.1 |
125.6 |
7.3 |
13,221.5 |
116.9 |
|
M &
I |
MS |
3.0 |
7,902 |
0.43 |
2.59 |
2.51 |
0.14 |
74 |
0.69 |
9.98 |
6.30 |
34.2 |
204.4 |
198.1 |
10.9 |
18,845.5 |
175.2 |
|
Inferred |
MS |
3.0 |
1,529 |
0.23 |
1.96 |
1.32 |
0.09 |
45 |
0.49 |
6.36 |
4.01 |
3.6 |
30.0 |
20.2 |
1.4 |
2,219.7 |
24.0 |
|
Measured(M) |
Str |
2.5 |
94 |
0.37 |
0.88 |
0.28 |
0.05 |
17 |
0.12 |
3.08 |
1.94 |
0.3 |
0.8 |
0.3 |
0.0 |
51.0 |
0.4 |
|
Indicated(I) |
Str |
2.5 |
643 |
0.34 |
0.90 |
0.23 |
0.09 |
17 |
0.06 |
3.23 |
2.04 |
2.2 |
5.8 |
1.5 |
0.6 |
354.0 |
1.3 |
|
M & I |
Str |
2.5 |
737 |
0.34 |
0.90 |
0.24 |
0.09 |
17 |
0.07 |
3.21 |
2.03 |
2.5 |
6.6 |
1.7 |
0.6 |
405.0 |
1.7 |
|
Inferred |
Str |
2.5 |
142 |
0.24 |
1.12 |
0.39 |
0.04 |
17 |
0.09 |
2.95 |
1.86 |
0.3 |
1.6 |
0.6 |
0.1 |
75.6 |
0.4 |
North |
M &
I |
All
zones |
2.9 |
10,334 |
0.37 |
2.12 |
2.39 |
0.16 |
64 |
0.64 |
9.06 |
5.72 |
38.2 |
219.0 |
247.2 |
16.2 |
21,377.7 |
212.0 |
North |
Inferred |
All
zones |
2.8 |
2,502 |
0.18 |
1.42 |
1.70 |
0.12 |
38 |
0.43 |
5.93 |
3.74 |
4.6 |
35.6 |
42.6 |
2.9 |
3,022.8 |
34.3 |
Central and South Zones Mineral Resource
Estimate
|
|
|
|
|
Average Grade |
Contained Metal |
Deposit |
Category |
Min |
Cut-off |
Tonnes |
Cu |
Zn |
Pb |
Sn |
Ag |
Au |
CuEq |
|
Cu |
Zn |
Pb |
Sn |
Ag |
Au |
|
|
Zones |
CuEq% |
(kt) |
(%) |
(%) |
(%) |
(%) |
(g/t) |
(g/t) |
(%) |
|
(kt) |
(kt) |
(kt) |
(kt) |
(koz) |
(koz) |
Central |
Inferred |
Str |
0.9 |
1,707 |
0.15 |
0.16 |
0.06 |
0 |
12 |
2.22 |
1.66 |
|
2.5 |
2.7 |
1.0 |
- |
635.2 |
121.9 |
South |
Measured(M) |
Str/Fr |
0.9 |
0 |
— |
— |
— |
— |
— |
— |
— |
|
|
|
|
|
|
|
|
Indicated(I) |
Str/Fr |
0.9 |
2,473 |
0.47 |
1.53 |
0.83 |
0.00 |
19 |
0.06 |
1.54 |
|
11.5 |
37.9 |
20.6 |
0.0 |
1,484.7 |
4.7 |
South |
M &
I |
Str/Fr |
0.9 |
2,473 |
0.47 |
1.53 |
0.83 |
0.00 |
19 |
0.06 |
1.54 |
|
11.5 |
37.9 |
20.6 |
0.0 |
1,484.7 |
4.7 |
South |
Inferred |
Str/Fr |
0.9 |
6,085 |
0.40 |
1.34 |
0.80 |
0.00 |
17 |
0.05 |
1.37 |
|
24.6 |
81.6 |
48.7 |
0.0 |
3,285.2 |
10.0 |
Notes to tables:(1) Min(eralized) Zones: GO=Gossan, MS=Massive
Sulphide, Str=Stringer, Str/Fr=Stockwork(2) ZnEq% = ((Zn
Grade*25.35)+(Pb Grade*23.15)+(Cu Grade*67.24)+(Au Grade*40.19)+(Ag
Grade*0.62)+(Sn Grade*191.75))/25.35(3) CuEq% = ((Zn
Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au
Grade*40.19)+(Ag Grade*0.62))/67.24(4) AuEq(g/t) = ((Zn
Grade*25.35)+(Pb Grade*23.15)+(Cu Grade * 67.24)+(Au
Grade*40.19)+(Ag Grade*0.62) )+(Sn Grade * 191.75))/40.19(5) Metal
Prices: Cu $6,724/t, Zn $2,535/t, Pb $2,315/t, Au $1,250/oz, Ag
$19.40/oz, Sn $19,175/t(6) Densities: GO=3.12, MS=4.76, Str=2.88,
Str/Fr=2.88
The updated Mineral Resource Estimate will form
the basis for the Preliminary Economic Assessment (“PEA”) that is
expected to be completed by year end.
Outlook
Operations & Financial
Metal production in Q3/19 demonstrated
significant growth over the previous two strong quarters as a
result of the increased investment in development made during the
first half of the year enabling access to higher-grade areas of the
mine resulting in greater anticipated contained metal production
driven by grade improvements.
The Company was successful in achieving its goal
of improved grades with an average head-grade of 7.8% ZnEq in
Q3/19, as it was anticipated average head-grades of approximately
8% ZnEq in the second half of the year, weighted towards the fourth
quarter. The benefits of the development work in the first half of
the year are expected to continue into the fourth quarter driving
the strongest operation year yet for Ascendant since it acquired
the El Mochito mine.
Improved grades were the key contributor to
significantly reducing the Company’s AISC in Q3/19. The Company had
anticipated an average AISC on a mine site basis at El Mochito for
H2/19 of $1.10 per ZnEq payable pound sold and $1.15 per ZnEq
payable pound sold on a consolidated basis, and was pleased to
report the achievement of $1.09 per ZnEq payable pound sold on a
mine site basis and $1.13 on a consolidated basis in Q3/19, with
similar expectations for Q4/19.
The reduction in underground development that
took place in Q3/19 and is expected to continue into Q4/19, will
result in lower than anticipated overall capital expenditure in
2019. The subsequent reduction in overall tonnes from waste
development translates into higher direct operating costs on a unit
basis as less waste development tonnes are capitalized, and more
fixed costs are allocated to production tonnes. As such, with the
expectation this trend will continue for the remainder of the year,
the Company expects direct operating costs to be around the upper
end of 2019 guidance. Capital expenditures meanwhile will trend
towards the lower end of guidance as underground development rates
remain reduced in light of the current metal price
environment.
Overall, the Company maintains its 2019
production guidance as announced on February 20, 2019, provided in
the table below:
Contained Metals in Concentrate |
|
Zinc equivalent metal |
90 – 110
million lbs |
|
Zinc |
65 – 75
million lbs |
|
Lead |
21 – 26
million lbs |
|
Silver |
850,000 –
1,200,000 ozs |
|
Direct Operating Costs |
$70 – $80
/ tonne |
|
Capital Expenditure |
$15 – $20
million |
|
Mine Expansion and Optimization
The Company remains actively engaged in
advancing the various project financing opportunities for the
expansion of El Mochito. The Preliminary Economic Assessment for
the expansion of the mine demonstrates the Company’s dedication and
focus on delivering long-term profitability and the ability to
operate the mine at an average AISC of $0.97 per ZnEq pound.
As stated above, it is the Company’s current
expectation to receive confirmation of financing by the end of the
year and to subsequently commence construction.
Lagoa Salgada Project
Subsequent to the quarter’s end, the Company
filed the Technical Report for the updated Mineral Resource
Estimate for the Lagoa Salgada project which is available on the
Company’s website and SEDAR.
The Mineral Resource Estimate update
incorporates all historic drilling in addition to the high-grade
drill results from the Ascendant lead 2018 and 2019 exploration
programs. Metallurgical testing is currently underway, and the
Company expects to complete a PEA by the end of 2019.
Conference Call Details
A conference call will be held tomorrow,
November 14, 2019, at 10:00am ET to discuss third quarter 2019
operational and financial results.
Dial-in Details:Date of Call:
Thursday, November 14, 2019Time of Call: 10:00am ETConference ID:
5361206Dial-In Numbers:North American Toll-Free:
1-833-696-8362International: 1-612-979-9908
A recorded playback of the conference call will
be available from November 14, 2019 until December 14, 2019 and can
be accessed on the Company’s website at www.ascendantresources.com
within the Investors section.
The information provided within this release
should be read in conjunction with Ascendant’s unaudited condensed
consolidated interim financial statements and management's
discussion and analysis for the three and six months ended
September 30, 2019 and 2018, which are available on Ascendant’s
website and on SEDAR. As at January 1, 2017, the Company has
changed its presentation currency to the U.S. dollar (US). All
financial figures are in US dollars unless otherwise stated.
Technical Disclosure/Qualified
Person
The scientific and technical information
contained in this press release has been reviewed and approved by
Robert A. Campbell, M.Sc., P.Geo., Director and Vice President,
Exploration for Ascendant Resources Ltd., whom is a "qualified
person" within the meaning of National Instrument 43-101 –
Standards of Disclosure for Mineral Projects.
About Ascendant Resources
Inc.
Ascendant is a Toronto-based mining company
focused on its 100%-owned producing El Mochito zinc, lead and
silver mine in west-central Honduras and its high-grade
polymetallic Lagoa Salgada VMS Project located in the prolific
Iberian Pyrite Belt in Portugal.
After acquiring the El Mochito mine in December
2016, Ascendant spent 2017 and 2018 implementing a rigorous and
successful optimization program restoring the historic potential of
El Mochito, a mine in production since 1948, to deliver record
levels of production with profitability restored. The Company now
remains focused on cost reduction and further operational
improvements to drive profitability in 2019 and beyond. With a
significant land package of approximately 11,000 hectares in
Honduras and an abundance of historical data, there are several
near-mine and regional targets providing longer term exploration
upside which could lead to further Mineral Resource growth.
Ascendant holds an interest in the high-grade
polymetallic Lagoa Salgada VMS Project located in the prolific
Iberian Pyrite Belt in Portugal. The Company is engaged in
exploration of the Project with the goal of expanding the already
substantial Mineral Resources and testing additional known targets.
The Company’s acquisition of its interest in the Lagoa Salgada
Project offers a low-cost entry point to a potentially significant
exploration and development opportunity. The Company holds an
additional option to increase its interest in the Project upon
completion of certain milestones.
Ascendant Resources is engaged in the ongoing
evaluation of producing and development stage mineral resource
opportunities, on an ongoing basis. The Company's common shares are
principally listed on the Toronto Stock Exchange under the symbol
"ASND". For more information on Ascendant Resources, please visit
our website at www.ascendantresources.com.
Neither the Toronto Stock Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX) accepts responsibility for the adequacy or
accuracy of this release. For further information please
contact:
Katherine PrydeDirector, Communications &
Investor RelationsTel: 888-723-7413info@ascendantresources.com
Cautionary Notes to US
Investors
The information concerning the Company’s mineral
properties has been prepared in accordance with National Instrument
43-101 (“NI-43-101”) adopted by the Canadian Securities
Administrators. In accordance with NI-43-101, the terms “mineral
reserves”, “proven mineral reserve”, “probable mineral reserve”,
“mineral resource”, “measured mineral resource”, “indicated mineral
resource” and “inferred mineral resource” are defined in the
Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”)
Definition Standards for Mineral Resources and Mineral Reserves
adopted by the CIM Council on May 10, 2014. While the terms
“mineral resource”, “measured mineral resource”, “indicated mineral
resource” and “inferred mineral resource” are recognized and
required by NI 43-101, the U.S. Securities Exchange Commission
(“SEC”) does not recognize them. The reader is cautioned that,
except for that portion of mineral resources classified as mineral
reserves, mineral resources do not have demonstrated economic
value. Inferred mineral resources have a high degree of uncertainty
as to their existence and as to whether they can be economically or
legally mined. It cannot be assumed that all or any part of any
inferred mineral resource will ever be upgraded to a higher
category. Therefore, the reader is cautioned not to assume that all
or any part of an inferred mineral resource exists, that it can be
economically or legally mined, or that it will ever be upgraded to
a higher category. Likewise, you are cautioned not to assume that
all or any part of a measured or indicated mineral resource will
ever be upgraded into mineral reserves.
Readers should be aware that the Company’s
financial statements (and information derived therefrom) have been
prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting
Standards Board and are subject to Canadian auditing and auditor
independence standards. IFRS differs in some respects from United
States generally accepted accounting principles and thus the
Company’s financial statements (and information derived therefrom)
may not be comparable to those of United States companies.
Forward Looking
Information
This news release contains "forward-looking statements" and
"forward-looking information" (collectively, "forward-looking
information") within the meaning of applicable Canadian securities
legislation. All information contained in this news release, other
than statements of current and historical fact, is forward-looking
information. Often, but not always, forward-looking information can
be identified by the use of words such as "plans", "expects",
"budget", "guidance", "scheduled", "estimates", "forecasts",
"strategy", "target", "intends", "objective", "goal",
"understands", "anticipates" and "believes" (and variations of
these or similar words) and statements that certain actions, events
or results "may", "could", "would", "should", "might" "occur" or
"be achieved" or "will be taken" (and variations of these or
similar expressions). Forward-looking information is also
identifiable in statements of currently occurring matters which may
continue in the future, such as "providing the Company with", "is
currently", "allows/allowing for", "will advance" or "continues to"
or other statements that may be stated in the present tense with
future implications. All of the forward-looking information in this
news release is qualified by this cautionary note.
Forward-looking information in this news release
includes, but is not limited to, statements regarding the
consistency of processing recovery levels, improvements of grades
in 2019, guidance, increase in contained metal production,
maintenance of production rates, increase of mill feed grades,
reduction of costs, monthly shipments of concentrate, the ability
to fully fund planned development, the ability to successfully
close its financing initiatives, exploration and capital
expenditures at El Mochito and Lagoa Salgada, the expectation of
expanding and updating the Mineral Resource Estimate at Lagoa
Salgada, the Company’s ability to complete a Preliminary Economic
Assessment for Lagoa Salgada, robust adjusted EBITDA and free cash
flow generation and the undertaking of various long-term
optimization programs including but not limited to the expansion
program at El Mochito. Forward-looking information is not, and
cannot be, a guarantee of future results or events. Forward-looking
information is based on, among other things, opinions, assumptions,
estimates and analyses that, while considered reasonable by
Ascendant at the date the forward-looking information is provided,
inherently are subject to significant risks, uncertainties,
contingencies and other factors that may cause actual results and
events to be materially different from those expressed or implied
by the forward-looking information. The material factors or
assumptions that Ascendant identified and were applied by Ascendant
in drawing conclusions or making forecasts or projections set out
in the forward-looking information include, but are not limited to,
the ability of the Company to maintain the consistency of
processing recovery levels, to improve grades in 2019, to achieve
guidance, increase contained metal production, maintain production
rates, increase mill feed grades, reduce costs, make monthly
shipments of concentrate, fully fund planned development,
successfully closing on its financing initiatives, exploration and
capital expenditures, maintain robust adjusted EBITDA and free cash
flow and undertake various long-term optimization programs
including but not limited to the expansion program at El Mochito,
the Company’s ability to expand and update the Mineral Resource
Estimate at Lagoa Salgada, complete a Preliminary Economic
Assessment for Lagoa Salgada, and other events that may affect
Ascendant's ability to develop its project; and no significant and
continuing adverse changes in general economic conditions or
conditions in the financial markets.
The risks, uncertainties, contingencies and
other factors that may cause actual results to differ materially
from those expressed or implied by the forward-looking information
may include, but are not limited to, risks generally associated
with the mining industry, such as economic factors (including
future commodity prices, currency fluctuations, energy prices and
general cost escalation), uncertainties related to the development
and operation of Ascendant's projects, dependence on key personnel
and employee and union relations, risks related to political or
social unrest or change, rights and title claims, operational risks
and hazards, including unanticipated environmental, industrial and
geological events and developments and the inability to insure
against all risks, failure of plant, equipment, processes,
transportation and other infrastructure to operate as anticipated,
compliance with government and environmental regulations, including
permitting requirements and anti-bribery legislation, volatile
financial markets that may affect Ascendant's ability to obtain
financing on acceptable terms, the failure to achieve guidance, the
failure to obtain required approvals or clearances from government
authorities on a timely basis, uncertainties related to the
geology, continuity, grade and estimates of mineral reserves and
resources, and the potential for variations in grade and recovery
rates, uncertain costs of reclamation activities, tax refunds,
hedging transactions, as well as the risks discussed in Ascendant's
most recent Annual Information Form on file with the Canadian
provincial securities regulatory authorities and available at
www.sedar.com.
Should one or more risk, uncertainty,
contingency, or other factor materialize, or should any factor or
assumption prove incorrect, actual results could vary materially
from those expressed or implied in the forward-looking information.
Accordingly, the reader should not place undue reliance on
forward-looking information. Ascendant does not assume any
obligation to update or revise any forward-looking information
after the date of this news release or to explain any material
difference between subsequent actual events and any forward-looking
information, except as required by applicable law.
NON-IFRS PERFORMANCE
MEASURES
The non-IFRS performance measures presented do
not have any standardized meaning prescribed by IFRS and are
therefore unlikely to be directly comparable to similar measures
presented by other issuers.
Non-IFRS reconciliation of Adjusted
EBITDA
EBITDA is a non-IFRS measure that represents an
indication of the Company’s continuing capacity to generate
earnings from operations before taking into account management’s
financing decisions and costs of consuming capital assets, and
management’s estimate of their useful life. EBITDA comprises
revenue less operating expenses before interest expense (income),
property, plant and equipment amortization and depletion, and
income taxes. Adjusted EBITDA has been included in this document.
Under IFRS, entities must reflect in compensation expense the cost
of share-based payments. In the Company’s circumstances,
share-based payments involve a significant accrual of amounts that
will not be settled in cash but are settled by the issuance of
shares in exchange for cash. EBITDA and Adjusted EBITDA do not have
any standardized meaning prescribed by IFRS and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA and Adjusted
EBITDA exclude the impact of cash costs of financing activities and
taxes, and the effects of changes in operating working capital
balances, and therefore are not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS. Other
companies may calculate EBITDA and Adjusted EBITDA differently. As
such, the Company has made an entity specific adjustment to EBITDA
for these expenses. The Company has also made an entity-specific
adjustment to the foreign currency exchange (gain)/loss.
The following table provides a reconciliation of
net income (loss) to Adjusted EBITDA:
|
|
|
|
Three months ended |
Nine months ended |
Adjusted EBITDA |
|
|
September 30, |
September 30, |
September 30, |
September 30, |
|
|
|
|
2019 |
2018 |
2019 |
2018 |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$000's |
(5,214) |
(3,853) |
(11,801) |
6,023 |
|
|
|
|
|
|
|
|
Adjusted
for: |
|
|
|
|
|
|
|
Advances to joint venture |
|
$000's |
1,448 |
- |
2,026 |
- |
|
Depletion and depreciation |
|
$000's |
1,955 |
1,276 |
5,293 |
3,259 |
|
Finance expenses |
|
$000's |
656 |
401 |
1,857 |
773 |
|
Accretion expense on rehabilitation liabilities |
|
$000's |
69 |
233 |
204 |
643 |
|
Charge on termination obligations |
|
$000's |
1,180 |
411 |
3,493 |
1,246 |
|
Share-based payments |
|
$000's |
29 |
165 |
294 |
869 |
|
Foreign currency exchange gain/loss |
|
$000's |
41 |
126 |
44 |
64 |
|
Income taxes |
|
$000's |
193 |
(484) |
904 |
716 |
Adjusted EBITDA |
|
$000's |
357 |
(1,725) |
2,314 |
13,593 |
Direct operating cost per tonne milled
The Company uses the non-IFRS measure of direct
operating cost per tonne milled to manage and evaluate operating
performance. The Company believes that, in addition to conventional
measures prepared in accordance with IFRS, certain investors use
this information to evaluate the Company’s performance and ability
to generate cash flows. Accordingly, it is intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. The Company considers cost of sales per tonne milled to
be the most comparable IFRS measure to direct operating cost per
tonne milled and has included calculations of this metric in the
reconciliations within the applicable tables to follow.
Direct operating cost per tonne milled includes
mine direct operating production costs such as mining, processing,
administration, indirect charges as surface maintenance and camp
expenses, and inventory sales adjustments but does not include,
smelting, refining and freight costs, royalties, depreciation,
depletion, amortization, reclamation, and capital costs.
The following table provides a reconciliation of
direct operating costs to cost of sales:
|
|
|
|
Three months ended |
Nine months ended |
Direct operating cost per tonne milled |
|
|
September 30, |
September 30, |
September 30, |
September 30, |
|
|
|
|
2019 |
2018 |
2019 |
2018 |
|
Mine operating expenses (from
consolidated income statement) |
|
$000's |
22,333 |
14,984 |
56,039 |
52,153 |
|
Add: Termination Liability
Payments |
|
$000's |
205 |
198 |
222 |
676 |
|
Deduct (Add): Variation in
Finished Inventory |
|
$000's |
(2,204) |
2,290 |
776 |
(2,512) |
|
Deduct:
Depreciation in production |
|
$000's |
(1,928) |
(1,276) |
(5,211) |
(3,259) |
Total cash costs (including royalties) |
|
$000's |
18,406 |
16,196 |
51,826 |
47,058 |
|
Deduct:
Government taxes and royalties |
|
$000's |
(1,106) |
(538) |
(2,982) |
(3,135) |
Direct operating costs |
|
$000's |
17,300 |
15,658 |
48,844 |
43,923 |
|
Tonnes
Milled |
|
tonnes |
199,944 |
191,738 |
588,572 |
571,121 |
Direct operating cost per tonne milled |
|
$/tonne |
$86.52 |
$81.66 |
$82.99 |
$76.91 |
|
|
|
|
Three months ended |
Nine months ended |
AISC
per ZnEq payable pound sold |
|
|
September 30, |
September 30, |
September 30, |
September 30, |
|
|
|
|
2019 |
2018 |
2019 |
2018 |
|
|
|
|
|
|
|
|
ZnEq payable
pounds sold |
|
000's lbs |
27,975 |
18,563 |
65,361 |
60,360 |
|
|
|
|
|
|
|
|
Cash
Operating Costs Reconciliation |
|
|
|
|
|
|
|
Direct operating costs |
|
$000's |
17,300 |
15,658 |
48,844 |
43,923 |
|
Add (deduct): Variation in Finished Inventory |
|
$000's |
2,204 |
(2,290) |
(776) |
2,512 |
Cash
operating costs |
|
$000's |
19,504 |
13,368 |
48,068 |
46,435 |
Cash operating cost per ZnEq payable pound
sold |
|
$/ZnEq lb |
$0.70 |
$0.72 |
$0.74 |
$0.77 |
|
|
|
|
|
|
|
|
All-in Sustaining Costs (AISC) Reconciliation |
|
|
|
|
|
|
|
Total cash operating costs |
|
$000's |
19,504 |
13,368 |
48,068 |
46,435 |
|
Add: Government taxes and royalties |
|
$000's |
1,106 |
538 |
2,982 |
3,135 |
|
Add: TC & RCs |
|
$000's |
6,393 |
3,427 |
14,775 |
10,478 |
|
Add: G&A, excluding depreciation and amortization |
|
$000's |
1,264 |
1,262 |
4,736 |
4,646 |
|
Add: Accretion expense on rehabilitation liabilities |
|
$000's |
69 |
233 |
204 |
643 |
|
Add: Sustaining capital expenditure |
|
$000's |
3,342 |
3,688 |
11,953 |
14,118 |
Total All-in sustaining costs - Consolidated |
|
$000's |
31,678 |
22,516 |
82,718 |
79,455 |
|
Deduct: G&A, excluding depreciation and amortization |
|
$000's |
(1,264) |
(1,262) |
(4,736) |
(4,646) |
Total All-in sustaining costs - El Mochito |
|
$000's |
30,414 |
21,254 |
77,982 |
74,809 |
AISC per ZnEq payable pound sold -
Consolidated |
|
$/ZnEq lb |
$1.13 |
$1.21 |
$1.27 |
$1.32 |
AISC per ZnEq payable pound sold - El Mochito |
|
$/ZnEq lb |
$1.09 |
$1.14 |
$1.19 |
$1.24 |
Additional non-IFRS
measures
The Company uses other financial measures, the
presentation of which is not meant to be a substitute for other
subtotals or totals presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. The
following other financial measures are used:
- Operating cash flows before movements in working capital -
excludes the movement from period-to-period in working capital
items including trade and other receivables, prepaid expenses,
deposits, inventories, trade and other payables and the effects of
foreign exchange rates on these items.
The terms described above do not have a
standardized meaning prescribed by IFRS, and therefore the
Company’s definitions are unlikely to be comparable to similar
measures presented by other companies. The Company’s management
believes that their presentation provides useful information to
investors because cash flows generated from operations before
changes in working capital excludes the movement in working capital
items. This, in management’s view, provides useful information of
the Company’s cash flows from operations and are considered to be
meaningful in evaluating the Company’s past financial performance
or its future prospects. The most comparable IFRS measure is cash
flows from operating activities.
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